Lockheed Martin Corporation Consolidated Statements of Earnings 1 (unaudited; in millions, except per share data)

Transcription

1 Consolidated Statements of Earnings 1 (unaudited; in millions, except per share data) Quarters Ended Years Ended Net sales $ 13,752 $ 11,520 $ 47,248 $ 40,536 Cost of sales (12,399) (10,383) (42,186) (36,044) Gross profit 1,353 1,137 5,062 4,492 Other income (expense), net 75 (37) Operating profit² 1,428 1,100 5,549 4,712 Interest expense (171) (142) (663) (443) Other nonoperating (expense) income, net (2) Earnings from continuing operations before income taxes 1, ,886 4,299 Income tax expense³ (296) (165) (1,133) (1,173) Net earnings from continuing operations³ ,753 3,126 Net earnings from discontinued operations , Net earnings³ $ 988 $ 933 $ 5,302 $ 3,605 Effective tax rate 23.6 % 16.8 % 23.2 % 27.3 % Basic Continuing operations³ $ 3.29 $ 2.67 $ $ operations Basic earnings per common share $ 3.39 $ 3.05 $ $ Continuing operations $ 3.25 $ 2.63 $ $ 9.93 operations earnings per common share $ 3.35 $ 3.01 $ $ Weighted average shares outstanding Basic Common shares reported in stockholders' equity at end of period ¹ As a result of the divestiture of the IS&GS business segment on Aug. 16, 2016, the operating results of the IS&GS business segment have been classified as discontinued operations in the year ended 2016 and in the quarter and year ended A $1.2 billion gain was recorded as a result of the divestiture of the IS&GS business segment and is recorded in earnings from discontinued operations in the year ended ² The amounts in the year ended 2016 include a noncash gain of $127 million recognized at the Corporation's Space Systems business segment related to the consolidation of the AWE venture upon obtaining control of this venture on Aug. 24, 2016, which increased net earnings from continuing operations $104 million (or $0.34 per share). ³ In 2016, the Corporation adopted a new accounting standard issued by the Financial Accounting Standards Board that changed certain aspects of the accounting for equity awards granted to employees. As a result, the Corporation recognized additional income tax benefits as an increase to net earnings from continuing operations and operating cash flows of $15 million ($0.05 per share) and $152 million ($0.50 per share) in the quarter and year ended The new accounting standard did not impact any periods prior to Jan. 1, Table 1

2 Business Segment Summary Operating Results Quarters Ended Years Ended % Change % Change Net sales Aeronautics $ 5,407 $ 4, % $ 17,769 $ 15, % Missiles and Fire Control 1,757 1,969 (11) % 6,608 6,770 (2) % Rotary and Mission Systems 3,809 2, % 13,462 9, % Space Systems 2,779 2, % 9,409 9,105 3 % Total net sales $ 13,752 $ 11, % $ 47,248 $ 40, % Operating profit Aeronautics $ 552 $ % $ 1,887 $ 1, % Missiles and Fire Control (34) % 1,018 1,282 (21) % Rotary and Mission Systems % % Space Systems (11) % 1,289 1, % Total business segment operating profit 1,290 1,280 1 % 5,100 4,978 2 % Unallocated items 2 FAS pension expense (261) (286) (1,019) (1,127) Less: CAS pension cost ,921 1,527 FAS/CAS pension adjustment Special item severance charges (67) (80) (82) Stockbased compensation (25) (20) (149) (133) Other, net (67) (188) (224) (451) Total unallocated items 138 (180) 449 (266) Total consolidated operating profit $ 1,428 $ 1, % $ 5,549 $ 4, % Operating margin Aeronautics 10.2 % 10.2 % 10.6 % 10.8 % Missiles and Fire Control 14.5 % 19.7 % 15.4 % 18.9 % Rotary and Mission Systems 6.0 % 5.6 % 6.7 % 9.3 % Space Systems 9.2 % 12.1 % 13.7 % 12.9 % Total business segment operating margin 9.4 % 11.1 % 10.8 % 12.3 % Total consolidated operating margin 10.4 % 9.5 % 11.7 % 11.6 % 1 The amounts for the year ended 2016 include a noncash gain of $127 million related to the consolidation of AWE upon obtaining control of this venture on Aug. 24, 2016, which increased net earnings from continuing operations $104 million (or $0.34 per share). 2 The following reclassifications of "Unallocated items" were made as a result of the divestiture of the IS&GS business segment: i) the nonservice portion of pension costs for IS&GS employees that participated in the Corporation's defined benefit pension and other postemployment benefit plans were reclassified from the operating results of the IS&GS business segment to "FAS/CAS pension adjustment" and were $54 million in the year ended 2016 and $18 million and $71 million in the quarter and year ended 2015, ii) Corporate overhead costs allocated to and included in the operating results of the IS&GS business segment were reclassified to "Other, net" were $82 million in the year ended 2016 and $32 million and $165 million in the quarter and year ended 2015, and iii) charges related to the IS&GS business segment that were historically recorded in "Special item severance charges" were reclassified to net earnings from discontinued operations and were $19 million in the year ended 2016 and $20 million in the year ended For more information see the "Unallocated items" section of the accompanying news release. Table 2

3 Consolidated Balance Sheets (unaudited; in millions, except par value) 2016 Assets Current assets Cash and cash equivalents 1, ¹ $ $ 1,090 Receivables, net 8,202 7,254 Inventories, net 4,670 4,819 Other current assets Assets of discontinued operations Total current assets 15,108 14,573 Property, plant and equipment, net 5,549 5,389 Goodwill 10,764 10,695 Intangible assets, net 4,093 4,022 Deferred income taxes 6,625 6,068 Other noncurrent assets 5,667 5,396 Assets of discontinued operations 2 3,161 Total assets $ 47,806 $ 49,304 Liabilities and equity Current liabilities Accounts payable $ 1,653 $ 1,745 Customer advances and amounts in excess of costs incurred 6,776 6,703 Salaries, benefits and payroll taxes 1,764 1,707 Current maturities of longterm debt 956 Other current liabilities 2,349 1,859 Liabilities of discontinued operations Total current liabilities 12,542 13,918 Longterm debt, net 14,282 14,305 Accrued pension liabilities 13,855 11,807 Other postretirement benefit liabilities 862 1,070 Other noncurrent liabilities 4,659 4,902 Liabilities of discontinued operations Total liabilities 46,200 46,207 Stockholders' equity Common stock, $1 par value per share Additional paidin capital Retained earnings 13,324 14,238 Accumulated other comprehensive loss (12,102) (11,444) Total stockholders' equity 1,511 3,097 Noncontrolling interests in subsidiary 95 Total equity 1,606 3,097 Total liabilities and equity $ 47,806 $ 49,304 1 Certain prior period amounts have been reclassified to conform with current period presentation. 2 The assets and liabilities of the IS&GS business segment have been classified as assets and liabilities of discontinued operations as of Table 3

4 Consolidated Statements of Cash Flows Years Ended Operating activities Net earnings $ 5,302 $ 3,605 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization 1,215 1,026 Stockbased compensation Severance charges Deferred income taxes (152) (445) Gain on divestiture of IS&GS business (1,242) Gain on step acquisition of AWE (104) Changes in assets and liabilities Receivables, net (811) (256) Inventories, net (46) (398) Accounts payable (188) (160) Customer advances and amounts in excess of costs incurred 3 (32) Postretirement benefit plans 1,028 1,068 Income taxes 146 (48) Other, net (210) 501 Net cash provided by operating activities 1 5,189 5,101 Investing activities Capital expenditures (1,063) (939) Acquisitions of businesses and investments in affiliates 2 (9,003) Other, net Net cash used for investing activities (985) (9,734) Financing activities Special cash payment from divestiture of IS&GS business 1,800 Proceeds from the issuance of longterm debt 9,101 Repayments of longterm debt (952) Proceeds from borrowings under revolving credit facilities 6,000 Repayments of borrowings under revolving credit facilities (6,000) Repurchases of common stock (2,096) (3,071) Dividends paid (2,048) (1,932) Proceeds from stock option exercises Other, net (267) 5 Net cash (used for) provided by financing activities (3,457) 4,277 Net change in cash and cash equivalents 747 (356) Cash and cash equivalents at beginning of period 1,090 1,446 Cash and cash equivalents at end of period $ 1,837 $ 1,090 1 Cash from operations includes cash flows generated by the IS&GS business segment through the closing of the divestiture of this business segment on Aug. 16, 2016, as the Corporation retained this cash as part of the divestiture. 2 Includes the $9.0 billion purchase price of Sikorsky, net of cash acquired. Table 4

5 Consolidated Statement of Equity Accumulated Additional Other Total Non Common PaidIn Retained Comprehensive Stockholders' controlling Total Stock Capital Earnings Loss Equity Interest Equity Balance at 2015 $ 303 $ $ 14,238 $ (11,444) $ 3,097 $ $ 3,097 Net earnings 5,302 5,302 5,302 Other comprehensive loss, net of tax 1 (658) (658) (658) Shares exchanged and retired in connection with divestiture of IS&GS business (9) (2,488) (2,497) (2,497) Repurchases of common stock (9) (395) (1,692) (2,096) (2,096) Dividends declared 2 (2,036) (2,036) (2,036) Stockbased awards, ESOP activity and other Increase in noncontrolling interests in subsidiary Balance at 2016 $ 289 $ $ 13,324 $ (12,102) $ 1,511 $ 95 $ 1,606 1 Primarily represents the reclassification adjustment for the recognition of prior period amounts related to postretirement benefit plans. 2 Represents dividends of $1.65 per share declared in each of the first, second and third quarters of Additionally, includes dividends of $1.82 per share declared in the third quarter of 2016 and paid in the fourth quarter of Table 5

6 Operating Data (unaudited; in millions, except aircraft deliveries) Backlog Aeronautics $ 34,200 $ 31,800 Missiles and Fire Control 14,700 15,500 Rotary and Mission Systems 28,400 30,100 Space Systems 18,900 17,400 Total backlog $ 96,200 $ 94,800 Quarters Ended Years Ended Aircraft Deliveries F F C130J C Table 6

7 Press Release Attachments Consolidated Statements of Earnings for Quarter Ended March 29, 2015 Quarter Ended June 28, 2015 Quarter Ended Sept. 27, 2015 Quarter Ended 2015 Aeronautics $ 3,134 $ $ 3,134 $ 4,131 $ $ 4,131 $ 3,921 $ $ 3,921 $ 4,384 $ $ 4,384 Information Systems & Global Solutions 1,390 (1,390) 1,408 (1,408) 1,401 (1,401) 1,397 (1,397) Missiles and Fire Control 1,383 1,383 1,649 1,649 1,769 1,769 1,969 1,969 Rotary and Mission Systems 1,979 1,979 2,165 2,165 2,162 2,162 2,785 2,785 Space Systems 2,225 2,225 2,290 2,290 2,208 2,208 2,382 2,382 Net sales 10,111 (1,390) 8,721 $ 11,643 $ (1,408) $ 10,235 $ 11,461 $ (1,401) $ 10,060 $ 12,917 $ (1,397) $ 11,520 Aeronautics Information Systems & Global Solutions 145 (145) 107 (107) 125 (125) 131 (131) Missiles and Fire Control Rotary and Mission Systems Space Systems Business Segment Operating Profit 1,306 (145) 1,161 1,400 (107) 1,293 1,369 (125) 1,244 1,411 (131) 1,280 Total Unallocated Items 50 (64) (14) 45 (65) (20) (15) (37) (52) (130) (50) (180) Total Consolidated Operating Profit 1,356 (209) 1,147 1,445 (172) 1,273 1,354 (162) 1,192 1,281 (181) 1,100 Interest expense (93) (93) (104) (104) (104) (104) (142) (142) Other nonoperating income, net Earnings from continuing operations before income taxes 1,266 (209) 1,057 1,343 (172) 1,171 1,251 (162) 1,089 1,163 (181) 982 Income tax expense (388) 69 (319) (414) 58 (356) (386) 53 (333) (230) 65 (165) Net earnings from continuing operations 878 (140) (114) (109) (116) 817 Net earnings from discontinued operations Net earnings $ 878 $ $ 878 $ 929 $ $ 929 $ 865 $ $ 865 $ 933 $ $ 933 Effective tax rate 30.6% 30.2% 30.8% 30.4% 30.9% 30.6% 19.8% 16.8% Basic Continuing operations $ 2.78 $ (0.44) $ 2.34 $ 2.98 $ (0.37) $ 2.61 $ 2.80 $ (0.35) $ 2.45 $ 3.05 $ (0.38) $ 2.67 operations Basic earnings per common share $ 2.78 $ $ 2.78 $ 2.98 $ $ 2.98 $ 2.80 $ $ 2.80 $ 3.05 $ $ 3.05 Continuing operations $ 2.74 $ (0.44) $ 2.30 $ 2.94 $ (0.36) $ 2.58 $ 2.77 $ (0.35) $ 2.42 $ 3.01 $ (0.38) $ 2.63 operations earnings per common share $ 2.74 $ $ 2.74 $ 2.94 $ $ 2.94 $ 2.77 $ $ 2.77 $ 3.01 $ $ 3.01 Three Months Ended March 29, 2015 Six Months Ended June 28, 2015 Nine Months Ended Sept. 27, 2015 Twelve Months Ended 2015 Aeronautics $ 3,134 $ $ 3,134 $ 7,265 $ $ 7,265 $ 11,186 $ $ 11,186 $ 15,570 $ $ 15,570 Information Systems & Global Solutions 1,390 (1,390) 2,798 (2,798) 4,199 (4,199) 5,596 (5,596) Missiles and Fire Control 1,383 1,383 3,032 3,032 4,801 4,801 6,770 6,770 Rotary and Mission Systems 1,979 1,979 4,144 4,144 6,306 6,306 9,091 9,091 Space Systems 2,225 2,225 4,515 4,515 6,723 6,723 9,105 9,105 Net sales 10,111 (1,390) 8,721 21,754 (2,798) 18,956 33,215 (4,199) 29,016 46,132 (5,596) 40,536 Aeronautics ,233 1,233 1,681 1,681 Information Systems & Global Solutions 145 (145) 252 (252) 377 (377) 508 (508) Missiles and Fire Control ,282 1,282 Rotary and Mission Systems Space Systems ,171 1,171 Business Segment Operating Profit 1,306 (145) 1,161 2,706 (252) 2,454 4,075 (377) 3,698 5,486 (508) 4,978 Total Unallocated Items 50 (64) (14) 95 (129) (34) 80 (166) (86) (50) (216) (266) Total Consolidated Operating Profit 1,356 (209) 1,147 2,801 (381) 2,420 4,155 (543) 3,612 5,436 (724) 4,712 Interest expense (93) (93) (197) (197) (301) (301) (443) (443) Other nonoperating income, net Earnings from continuing operations before income taxes 1,266 (209) 1,057 2,609 (381) 2,228 3,860 (543) 3,317 5,023 (724) 4,299 Income tax expense (388) 69 (319) (802) 127 (675) (1,188) 180 (1,008) (1,418) 245 (1,173) Net earnings from continuing operations 878 (140) 738 1,807 (254) 1,553 2,672 (363) 2,309 3,605 (479) 3,126 Net earnings from discontinued operations Net earnings $ 878 $ $ 878 $ 1,807 $ $ 1,807 $ 2,672 $ $ 2,672 $ 3,605 $ $ 3,605 Effective tax rate 30.6% 30.2% 30.7% 30.3% 30.8% 30.4% 28.2% 27.3% Basic Continuing operations $ 2.78 $ (0.44) $ 2.34 $ 5.76 $ (0.81) $ 4.95 $ 8.57 $ (1.16) $ 7.41 $ $ (1.55) $ operations Basic earnings per common share $ 2.78 $ $ 2.78 $ 5.76 $ $ 5.76 $ 8.57 $ $ 8.57 $ $ $ Continuing operations $ 2.74 $ (0.44) $ 2.30 $ 5.68 $ (0.80) $ 4.88 $ 8.45 $ (1.15) $ 7.30 $ $ (1.53) $ 9.93 operations earnings per common share $ 2.74 $ $ 2.74 $ 5.68 $ $ 5.68 $ 8.45 $ $ 8.45 $ $ $ Table 8

8 Press Release Attachments Consolidated Statements of Earnings for Quarter Ended March 27, 2016 Quarter Ended June 26, 2016 Quarter Ended Sept. 25, 2016 Quarter Ended 2016 Aeronautics $ 3,799 $ $ 3,799 $ 4,375 $ $ 4,375 $ 4,188 $ $ 4,188 $ 5,407 $ $ 5,407 Information Systems & Global Solutions 1,334 (1,334) 0 1,337 (1,337) Missiles and Fire Control 1,434 1,434 1,680 1,680 1,737 1,737 1,757 1,757 Rotary and Mission Systems 3,004 3,004 3,303 3,303 3,346 3,346 3,809 3,809 Space Systems 2,131 2,131 2,219 2,219 2, ,280 2, ,779 Net sales 11,702 (1,334) 10,368 12,914 (1,337) 11,577 11,551 11,551 13,752 13,752 Aeronautics Information Systems & Global Solutions 109 (109) 151 (151) Missiles and Fire Control Rotary and Mission Systems Space Systems Business Segment Operating Profit 1,223 (109) 1,114 1,424 (151) 1,273 1,423 1,423 1,290 1,290 Total Unallocated Items 74 (30) (40) Total Consolidated Operating Profit 1,297 (139) 1,158 1,566 (191) 1,375 1,588 1,588 1,428 1,428 Interest expense (164) (1) (165) (166) 1 (165) (162) (162) (171) (171) Other nonoperating income, net (2) (2) Earnings from continuing operations before income taxes 1,134 (140) 994 1,400 (190) 1,210 1,427 1,427 1,255 1,255 Income tax expense ¹ (236) 48 (188) (379) 68 (311) (338) (338) (296) (296) Net earnings from continuing operations ¹ 898 (92) 806 1,021 (122) 899 1,089 1, Net earnings from discontinued operations ,306 1, Net earnings ¹ $ 898 $ $ 898 $ 1,021 $ $ 1,021 $ 2,395 $ $ 2,395 $ 988 $ $ 988 Effective tax rate 20.8% 18.9% 27.1% 25.7% 23.7% 23.7% 23.6% 23.6% Basic Continuing operations $ 2.95 $ (0.30) $ 2.65 $ 3.37 $ (0.40) $ 2.97 $ 3.64 $ $ 3.64 $ 3.29 $ $ 3.29 operations Basic earnings per common share $ 2.95 $ (0.00) $ 2.95 $ 3.37 $ $ 3.37 $ 8.02 $ $ 8.02 $ 3.39 $ $ 3.39 Continuing operations $ 2.91 $ (0.30) $ 2.61 $ 3.32 $ (0.39) $ 2.93 $ 3.61 $ $ 3.61 $ 3.25 $ $ 3.25 operations earnings per common share $ 2.91 $ $ 2.91 $ 3.32 $ (0.00) $ 3.32 $ 7.93 $ $ 7.93 $ 3.35 $ $ 3.35 Three Months Ended March 27, 2016 Six Months Ended June 26, 2016 Nine Months Ended Sept. 25, 2016 Twelve Months Ended 2016 Aeronautics $ 3,799 $ $ 3,799 $ 8,174 $ $ 8,174 $ 12,362 $ $ 12,362 $ 17,769 $ $ 17,769 Information Systems & Global Solutions 1,334 (1,334) 2,671 (2,671) Missiles and Fire Control 1,434 1,434 3,114 3,114 4,851 4,851 6,608 6,608 Rotary and Mission Systems 3,004 3,004 6,307 6,307 9,653 9,653 13,462 13,462 Space Systems 2,131 2,131 4,350 4,350 6,630 6,630 9,409 9,409 Net sales 11,702 (1,334) 10,368 24,616 (2,671) 21,945 33,496 33,496 47,248 47,248 Aeronautics ,335 1,335 1,887 1,887 Information Systems & Global Solutions 109 (109) 260 (260) Missiles and Fire Control ,018 1,018 Rotary and Mission Systems Space Systems ,034 1,034 1,289 1,289 Business Segment Operating Profit 1,223 (109) 1,114 2,647 (260) 2,387 3,810 3,810 5,100 5,100 Total Unallocated Items 74 (30) (70) Total Consolidated Operating Profit 1,297 (139) 1,158 2,863 (330) 2,533 4,121 4,121 5,549 5,549 Interest expense (164) (1) (165) (330) (330) (492) (492) (663) (663) Other nonoperating income, net Earnings from continuing operations before income taxes 1,134 (140) 994 2,534 (330) 2,204 3,631 3,631 4,886 4,886 Income tax expense ¹ (236) 48 (188) (615) 116 (499) (837) (837) (1,133) (1,133) Net earnings from continuing operations ¹ 898 (92) 806 1,919 (214) 1,705 2,794 2,794 3,753 3,753 Net earnings from discontinued operations ,520 1,520 1,549 1,549 Net earnings ¹ $ 898 $ $ 898 $ 1,919 $ $ 1,919 $ 4,314 $ $ 4,314 $ 5,302 $ $ 5,302 Effective tax rate 20.8% 18.9% 24.3% 22.6% 23.1% 23.1% 23.2% 23.2% Basic Continuing operations $ 2.95 $ (0.30) $ 2.65 $ 6.32 $ (0.71) $ 5.61 $ 9.25 $ $ 9.25 $ $ $ operations Basic earnings per common share $ 2.95 $ (0.00) $ 2.95 $ 6.32 $ 0.00 $ 6.32 $ $ $ $ $ $ Continuing operations $ 2.91 $ (0.30) $ 2.61 $ 6.23 $ (0.69) $ 5.54 $ 9.13 $ $ 9.13 $ $ $ operations earnings per common share $ 2.91 $ $ 2.91 $ 6.23 $ $ 6.23 $ $ $ $ $ $ ¹ Income tax expense and net earnings for the quarter and year ended March 27, 2016 reflect the adoption during the second quarter of 2016 of a new accounting standard issued by the Financial Accounting Standards Board that changed certain aspects of the accounting for equity awards. Table 8